After moving mostly higher over the course of the previous session, stocks saw some further upside during trading on Wednesday. The continued strength on Wall Street came as traders reacted positively to a batch of relatively upbeat U.S. economic data.
The major averages ended the day firmly in positive territory, not far off their highs for the session. The Dow rose 92.34 points or 0.7 percent to 12,627.01, the Nasdaq climbed 21.26 points or 0.7 percent to 2,875.32 and the S&P 500 advanced 11.86 points or 0.9 percent to 1,331.85.
Much of the strength on Wall Street stemmed from the release of separate reports showing bigger than expected increases in durable goods orders and pending home sales.
The Commerce Department released a report before the start of trading showing that durable goods orders jumped by 1.1 percent in May following a revised 0.2 percent decrease in April. Economists had expected orders to increase by 0.4 percent.
Excluding orders for transportation equipment, durable goods orders increased by a more modest 0.4 percent in May compared to a 0.6 percent drop in the previous month.
Additionally, a report from the National Association of Realtors showed much stronger than expected pending home sales growth in May.
NAR said its pending home sales index jumped 5.9 percent to 101.1 in May after falling 5.5 percent to 95.5 in April. Economists had expected pending home sales to show a much more modest 1.2 percent increase.
A pending sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.
The better than expected pending home sales data came on the heels of the release of upbeat reports on new home sales and home prices earlier in the week.
While stocks moved mostly higher on the day, the major averages remain well off last week's highs amid uncertainty about an upcoming summit of European leaders.
Ahead of the meeting, German Chancellor Angela Merkel reiterated her opposition to the idea of common eurozone bonds, saying that Europe would not share debt liability in her lifetime.
Sector News
While strength was visible in a variety of sectors, natural gas stocks posted particularly strong gains, driving the NYSE Arca Natural Gas Index up by 3.8 percent. Cabot Oil & Gas (COG) and QEP Resources (QEP) turned in two of the sector's best performances.
Natural gas stocks initially benefited from an increase by the price of natural gas, which reached a high of $2.975 per million BTUs, but the sector continued to perform well even as the price of the commodity pulled back.
Significant strength was also visible among housing stocks, which benefited from the better than expected pending home sales report. The Philadelphia Housing Sector Index surged up by 3 percent, with Lennar (LEN) posting a notable gain after reporting better than expected quarterly results.
Oil service stocks also saw considerable strength, moving higher along with the price of crude oil. With crude for August delivery climbing $0.85 to $80.21 a barrel, the Philadelphia Oil Service Index advanced by 2.9 percent.
Healthcare provider, financial, networking, and computer hardware stocks also posted strong gains, reflecting broad based buying interest.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan's Nikkei 225 Index advanced by 0.8 percent, while Hong Kong's Hang Seng Index surged up by 1 percent.
The major European markets also showed strong moves to the upside on the day. The U.K.'s FTSE 100 Index jumped 1.4 percent, while the German DAX Index and the French CAC 40 Index soared 1.5 percent and 1.7 percent, respectively.
In the bond market, treasuries turned in a lackluster performance, lingering near the unchanged line. The yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 1.621 percent.
Looking Ahead
With the summit of European leaders getting underway, developments from across the Atlantic are likely to be in focus on Wall Street on Thursday.
Trading could also be impacted by the release of the weekly jobless claims report and the Commerce Department's final report on first quarter GDP.
by RTT Staff Writer
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